Indian Rupee: No rise, only fall. Is the Central Government doing enough?

In
case no one noticed, Stock markets in India have been painted red with the
incessant bleeding of the Indian Rupee. Latest figures show the Rupee
plummeting to new lows every hour with the latest being at Rs. 72.97 for 1
dollar, the Indian currency has been labelled the worst performing of all Asian
countries.

Gas prices have been skyrocketing with 82 Rs. for 1 liter of
gasoline which has also contributed to the near 'crash ' that the currency is
facing. We didn't even notice the subtle fall since late July and now that
everything that could go wrong is going wrong at once it almost feels the
economy has been set on fire.

The issues have also turned political in addition
to economic stress with opposition seeing it is like a weakness to be exploited
for ousting the current Mr. Narendra Modi administration. I

n the time that government begins
to comprehend and pinpoint what it is that is going wrong, the country
including its citizens, Companies, Stock owners suffer with investors losing
over 2.72 trillion rupees. Put that in crores the amount comes out to be ₹2,72,549.15
CROREwhich
is not a small amount by any means.

Why
is the Rupee falling?

The
Indian currency has seen its fair shares of highs and lows but the lows have
never been lower. So what exactly is causing the Indian currency to perform so
poorly against the rest of Asia and the US dollar?

Not to paint a picture of
gloom, doom, and despair but the currency has lost its value by 11% in 2018
itself it should be an alarming wake-up call if not a catastrophe waiting to
drown the economy.

Basically,
Rupee is falling against the dollar only because the demand for dollars is in
stark excess to its supply. The supply of dollars has been low because of our
export bill being much shorter as compared to imports.

This could either be
because traders haven't completed their IEC
registration or because as a whole the Make in India project hasn't
yielded the strong results that were expected.

Added
on top of that the "honourable" President of the United States Mr.
Donald Trump has been declaring trade wars against almost everyone in Europe
and many Asian countries by cutting subsidies, it seems like the fall of the
Indian rupee's fall was inevitable anyway.

Weak
Efforts from Administration

While
India has never been a country to attack first maybe it would be better if the
government attacked the impending internal problems and maybe we could have
been in a better position. However, the reactive approach from the government
towards the disgraceful fall of the rupee has failed to yield too many results.

The sweeping changes in the volatile taxation system in India coupled with
demonetization post-effects have been nothing short of catastrophic and have
contributed to the rupee seeing new lows.

Although, the government is improving
the taxation system with reforms to the GST registration
and GST return procedures.

Let's
take a look at what measures the government has taken so far to curb the fall.

·Masala
Bonds rules have been relaxed to ease the process of raising overseas debt in
rupees rather than any other currency

·Infrastructure
Firms are no longer bound by minimum hedging requirements for raising ECB.

However,
even after all these measures and fresh selling of dollars, the rupee seems to
be plummeting into oblivion with no end in sight. This begs the question: Is
the government doing enough?

Conclusion

Before
we jump to unrealistic conclusions and start pointing fingers at the government
for not doing enough let's take a birds-eye view on the matter. Indians in
their day to day to life are suffering and that needs to stop first and
foremost.

We have seen that the government is opening up and relaxing many
stringent laws and restrictions in a pursuit to free the currency from its
somewhat dramatic fall. Even after so many efforts if the rupee is still
looking down, maybe we need to point fingers elsewhere. Many of the reasons for
the devaluation of the rupee can be attributed to external factors and how the
government of the United States plans to continue their business and policy
dealings.

There is no need to panic and be out with the calculators just yet,
like everything this just needs time to stabilize and we're sure that the
government will weather this storm soon enough.

Indian Rupee: No rise, only fall. Is the Central Government doing enough?
Reviewed by S. Chitra
on
October 17, 2018
Rating: 5 Indian Rupee: No rise, only fall. Is the government doing enough? Fall from Grace In case no one noticed, Stock markets in India h...